Sensex, Nifty hit record high as banks extend rally

NDTV Profit Desk

24 Mar 2014, 02:44 PM IST

Sensex, Nifty hit record high as banks extend rally

The BSE Sensex and Nifty jumped more than 1 per cent on Monday to record highs, surpassing their previous all-time highs hit just last week, as lenders including ICICI Bank extended a recent rally on the back of strong foreign investor flows. (Also see: Live market blog)

The Nifty rose as much as 1.3 per cent to a lifetime high of 6,580.90, while the benchmark Sensex touched a record high of 22,046.58, surpassing their previous milestones hit on March 18.

Banks led the gains on optimism about a recovery in the domestic economy tipped to be growing at its lowest pace in a decade, and bets the Reserve Bank of India would keep interest rates on hold for now at its policy review on April 1. (Read: Why banking stocks are gaining)

The prospect that the general elections due to conclude by May will usher in a new government led by the opposition Bharatiya Janata Party is also aiding the gains, given market perceptions that the party has a more business-friendly stance.

Foreign investors have been particularly heavy buyers during the rally, with net purchases of $1.6 billion of shares so far this month, regulatory data showed.

"While the euphoria and the run-up in the equity markets driven by foreign inflows are positive, caution is warranted," Radhika Rao, an economist at DBS Bank in Singapore wrote in a note on Monday.

"Inflation risks, high borrowing rates, a weak industrial sector and subdued consumption spending are amongst the main economic challenges facing the next government," Rao added.

The Nifty was up 1.35 per cent at 2:35 p.m., while the Sensex was up 1.36 per cent. (Track markets)

Banks led the rally, with ICICI Bank surging 3.49 per cent and State Bank of India gaining 1.7 per cent.

The sector has been one of the top performers this month, with the NSE's bank sub-index gaining about 15 per cent so far this month, outperforming the nearly 5 per cent gain in the Nifty.

Other blue chips also rose, Reliance Industries rose 1.68 per cent while ITC gained 1.74 per cent.